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Most of us have investments of some form in our 401K, pension plan, IRA, brokerage account, or even our bank accounts. We own stocks, bonds, and more than likely we own some mutual funds. Mutual funds have become a popular investment tool, because it allows a individual investor to diversify a small amount of money across many companies. Over the past ten years, the mutual fund industry has exploded. Companies now offer funds that concentrate on specific industries or ideals. There are oil industry funds, utilities funds, defense funds, and a growing segment is faith based mutual funds.
Faith based investing is a type of Socially Responsible Investing (SRI). SRI became popular in the 1980s when many Americans did not want to invest in businesses that had operations involved with apartheid in South Africa. A few mutual fund companies took the idea of SRI and applied sect of religious values to create faith based investing. The Catholic Church recognized faith based investing with the publication of its "Socially Responsible Investment Guidelines" in 1991. The document instructs US bishops to follow these guidelines when investing:
- The first is to avoid evil by not investing in companies whose policies or products are contrary to Catholic teaching.
- The second is to do good by choosing to invest in companies that foster Catholic social and moral values.
- The third is stockholder activism. The document recommends using a position as a shareholder to influence the corporation's policies and activities.
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Two mutual fund companies that follow Catholic values are Ave Maria Mutual Funds and Aquinas Funds. These funds do not invest in companies whose operations include weapons, contraception, and abortion. In some cases, the funds may not invest in other controversial products, such as tobacco or alcohol. Some people argue that following Catholic guidelines eliminates some of the most profitable companies, thereby making it more difficult to make money. Research has been done by Morningstar, a leading mutual fund research firm, to show that faith based mutual funds do just as well, or just as poor as other funds. As with all investment tools, it is recommended to research the mutual fund or seek the advice of a paid professional before investing.
The following links provide more information on faith based investing and some mutual fund companies.
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